Well, the debate over the viability of the Chevy Volt has been well and truly joined, as political and auto writers around the web spent the last week weighing in on the issue. Needless to say, a scan of these opinions shows that my NY Times Op-Ed has drawn a wide variety of reactions, ranging from complete agreement to utter contempt. But, in a phenomenon that seems all-too common on the internet these days, very few commentaries on my opinion (positive and negative alike) bring more detail or nuance to the issue. Which is too bad, because I’d be the last person to argue that I’m capable of doing complete justice to an issue as complex as the Volt in only 900 words. The variables and unforeseeable consequences floating around the Volt’s future are so vast and varied, no writer could possibly hope to cover them all. And one such problem didn’t even emerge until the day after I wrote the Times Op-Ed: dealer markups on the Volt.

Edmunds AutoObserver got one California dealer to admit that he plans on charging $20,000 on top of the Volt’s $41,000 base MSRP. And as AutoObserver’s Bill Visnic points out

Unlike typical gouging for high-demand vehicles, the Volt situation transcends mere dollars and cents and moves into the political realm. Will GM sit on dealers scheming big-time price-gouging on the Volt – a car that features a $7,500 federal tax subsidy funded by the same taxpayers who already bailed out GM?

And what would President Obama think – he drove a Volt last Friday and defended GM’s controversial $43-billion bailout – about dealers demanding an incredible markup for a car that’s supposed to help the U.S. auto industry move into a new era and become self-sustaining again?

The market has proven time and again that customers who pay big markups for in-demand models end up the sucker, so caveat emptor. But dealers clipping the very people who helped keep them in business is a new and ugly twist on an age-old auto-industry phenomenon.

A reader at Autoextremist wrote in to say that another dealer was planning on charging $10,000 over the Volt’s MSRP [incidentally, I rarely agree with Pete DeLorenzo as much as I did with his latest rant on the Volt, which may be one of the best pieces on the topic I’ve read in some time].

But whether dealers charge $10k or $20k almost doesn’t matter, considering how crazily expensive the Volt is already. So what’s GM going to do about it? GM’s Rob Peterson tells the Freep

We don’t control any pricing at the dealership, However we have suggested strongly that they keep prices in line with what we have offered

Which means that the debate over the Volt’s price has been entirely academic thus far, since nobody knows just how much one will actually cost at a given dealer. Sure, the Freep found one dealer who promised to charge nothing on top of MSRP, but after the rough couple of years that most Chevy dealers have had, that honest soul is probably going to be in the minority. Even an informal poll at the Volt’s officially-unofficial fan site gm-volt.com indicates that gouging will be rampant. Well, it would if the majority of die-hard fans ever get around to talking to a dealer instead of simply commenting about how the Volt is, in fact, the future of motorized transport. On the other hand, gm-volt’s “dealer gouging” forum offers plenty of reasons to simply run away screaming.

A Volt at $41k is one thing… and I’m sure that early adopters will snap up the first year’s run of 10,000 units at that price. But at $60k? And what dealer is going to offer a lower-cost lease when they can simply auction Volts off (as it appears some are doing). GM might not have a ton of leverage to stop dealer gouging, but shouldn’t The General be trying to do something?

I hate dealer additional markups and have never paid one. That said, any time a new vehicle comes out and demand far exceeds supply, the dealers get extra bucks. The argument is that this is simply how capitalism works in a supply and demand driven world.

If dealers do manage to get much higher than MSRP pricing for Volts then that means it is popular well beyond GM’s ability to build them. Such does not mean that the vehicle is somehow doomed.

Honda Odyssey vans sold for above MSRP for quite a long time after their first competitive design was done. Miatas, Mustangs and Camaros all had their day in the additional dealer markup sun as well. That didn’t kill the products or the brands.

What can GM do about the situation? Work hard to increase supply.

People who pay those prices get a big thrill out of the “I got one first” bragging rights. Not my thing, but so it goes.

Right on. Even if its a total dud, they should be able to unload the 10k produced this year.

If anything, creating false shortages has seemed to work wonders for marketing anything from Nintendo Wiis to H1N1 flu shots. Unfortunately, the Volt will target a very small demographic, and after the elite few get their fix, there will be crickets chirping in the Volt section of the lot next year.

Dealers are free to charge whatever they want for their vehicles. Buyers can pay it or not. The real problem for GM is that the Volt is going to bring totally new buyers to Chevy that never would have considered Chevy before, and their first experience with the brand will be a huge markup on the Volt and an arrogant salesman.

If the market allows for junk surcharges, the dealers will fill the void accordingly. While I loath the idea of the dealers f**king over the public, I would rather let the supply/demand market do its own correction than mandating a limit. However, when the dealers cry that they get a bum rap and the public’s perception is unfair, all they have to do is look in the mirror. Most car dealerships and the sales staff are opportunistic scumbags and this is the proof. For the few that do not act this way, I apologize in advance. The rest of you, kiss off.

Dealer markups will kill the Volt wherever it is done, but the market will quickly correct.

To expand on the point, those who buy tickets to see professional sports events have no right to complain about how much the players are paid. Similarly, if someone pays $60k to be the first Volt owner in town, good for them and the dealer. I’d prefer a 5-seat Elantra that doesn’t need to be plugged in every night.

But in the end, many other things will kill the Volt, not the least of which is the Cruze, sitting in the same showroom.

The Volt doesn’t need to be plugged in every night either, though it helps.

Is the Volt worth $60k … not to me, but there’s 5000 Google engineers up the road from here for whom $60k is an average Christmas bonus and who wallow in technology gadgets. The Tesla is $60k more than its half-sister Elise and I’m seeing more and more of them on the roads (especially around the streets by Google).

“…incidentally, I rarely agree with Pete DeLorenzo as much as I did with his latest rant on the Volt,”

Ed, I am certain in my suspicions that John McElroy would like to schedule you as guest on Autoline After Hours with autoextremist Peter DeLorenzo. It will certainly be the most interesting and watched shows since RF was a guest–full episode here: http://www.ustream.tv/recorded/1449287

And Peter’s On The Table page this week has him quoting Animal House, but not the same quote as Gibbs.

If GM were smart, they would have crafted a unique Sales & Service franchise agreement for this car (like they did with Saturn) that gives them a greater degree of control over dealer actions that could damage the brand. There are precedents for doing it with a specific model – Chrysler did it with the Dodge Viper.

Yes there will be those people who are willing to pay whatever to have the first of anything, witness the I-pod/I-pad etc. When you get down to it business is all about making a profit so if GM and the dealers can make a profit good for them. Prices will eventually stabalize at a reasonable level and even go below MSRP as more units become available. A bigger question for GM and its dealers is whether they can sell Volts in large numbers. I keep hearing how thousands of people are lined up to buy these EV wonders. I’ll believe this when they put their money where their mouth is, talk’s cheap. I for one am not willing to pay a premium price that I will never recover even if gas goes to $10 a gallon.

I still have trouble believing that anyone will pay $41,000 for a car, that is primarily designed to get good gas mileage. I have an even harder time believing that some dope will pay a dealer markup above MSRP. That’s just plain stupid.

A Camry Hybrid only costs around $28,000. It gets good gas mileage, and the $13,000 difference buys a hell of a lot of gas.

I get the fact that some cars are an emotional purchase. I have not driven a volt, but I can’t imagine it will get my heart racing.

I just don’t get the prospective Volt buyer. Does he/she care about fuel economy? If so, other cars are more economical. Does he/she care about handling and performance? Other cars designed for that will most likely be better.

The Volt seems to be a technical exercise that excels at nothing. I suspect this experiment will not end well for GM.

Its become clear from this post and others here… that people don’t actualy know what the Volt is.
There won’t be another car on the road like it. It is unique in that it is first and foremost an EV.. the engine in it will never be powering the wheels, it will only be recharging the battery.
While of course its performance is still not known, what is known is that its unique and does further alternative technologies.

Furthermore, there are plenty of more reasons to buy a car, economics and fuel economy aren’t the only ones.
Somebody who considers themselves a car enthusiast but is concerned about economic efficency above all, mostly means they are a fake car enthusiast.

“Furthermore, there are plenty of more reasons to buy a car, economics and fuel economy aren’t the only ones.
Somebody who considers themselves a car enthusiast but is concerned about economic efficency above all, mostly means they are a fake car enthusiast.”

On the contrary, everyone here understands what the Volt is. However, enthusiasts don’t buy Camrys, but they make Toyota lots of money. People buy Camrys and Corvettes because they fulfill their purpose in life – whether it’s economics, performance, or whatever.

The Volt’s purpose is what? Economics? If so, it fails. “Economy” cars don’t cost $41k, so its cost of ownership is too high.
Is the Volt’s purpose to be ‘green’? It may achieve this, but then you’ve limited its market to tree-huggers.
Is the Volt’s purpose utility? With only 4-passenger seating, that’s debatable.
Is the Volt’s purpose ease of use? It fails since the only way to achieve its economy is to plug it in every day.

Cars designed for enthusiasts rarely make lots of money for their manufacturers, since they are niche players in their portfolio. GM has already said the Volt will be a money loser. If the Volt ends up as a money-losing niche player, the taxpayer-owners of GM are unhappy about it.

@gslippy
The Volt was made for 2 purposes:
1. Green Halo car – to change GM’s image of building gas guzzling Hummers and killing the EV1
2. Rolling tech testing platform – at some point in the future, Electric cars will be the norm, might as well start designing the tech now (heaven forbid that GM gets behind the curve like they did with Hybrids). The side benefit of some of the Volt’s tech (EPS, more efficient AC/heater, more efficient electronics, etc.) is that it will end up in all of GM’s vehicles in the future because of CAFE.

“A Camry Hybrid only costs around $28,000. It gets good gas mileage, and the $13,000 difference buys a hell of a lot of gas”

Sorry but no one buying the Volt is doing it to save money. So you need to let go of those types of comparisons and move on. The Volt is the only car, besides the Leaf, that you can drive without ever putting gas in. Unless you get out and push it, your Camry hybrid needs a gas station no matter how you drive it.

If people want to pay way above MSRP, more power to them and the dealers. I won’t play that game. I’ll just keep driving what
I got and then go pick up my Volt once the madness has died down. It’s just that simple.

+1 I never understood why any manufacturing company wouldn’t want as much control at the retail level as they could get. Sure it may cost some on the short end, but in the long run you wouldn’t have to deal with Wal-Mart-esque squeeze plays. Likewise you could build brand identity rapidly and consistently.

While I think that the $20,000 surcharge story is a well calculated PR move designed to boost sales (same as the announcement of the production ramp-up), let’s wait until 2011 and then see what kills what.

For decades, GM’s motto has always been “just wait till next year” and “just wait till the next one, it’ll be better we promise”

Too bad that when GM promises somethingthat is “right around the corner” it dsimissed as “fluff” and hype so much so that buyers just go elsewhere instead of waiting around only to be let down.

GM is a leader of nothing. And as other automakers continue to improve in both (realistic) design and significant differences in areas that can be improved, GM pulls out the third stirng and their kicker with the most potential to kick a field goal for the win.

The dealer with the $20k markup is in California. Considering like half of Hollywood drives a Pious, the few Volts initially available in CA can and will be marked up and sold to those with enough money not to care.

It’s not about saving gas money, or saving the world, it’s a status symbol.

Look at what this did to the G8. Ridiculous $10k mark ups and then 6 months later they are begging people to come test drive the cars, which by then have patinated rotors and bird nests in the bumpers.

Just one area where the goals of the dealership and the manufacturer are not congruent. The manufacturer wants the distributor to push 10 units at $1.5k margin each. The distributor would rather sell 2 units at $10k margin each. And of course the distributors have bribed their state assemblies into making it illegal for consumers to purchase direct.

GM dealers did the same thing with the GTO. The early 2004 models commanded $10k+ markups, but by the end of the year they had cash on the hood to take them. I bought my 2006 for about $6000 under sticker. The manufacturer and the dealer will always be at odds with each other; the former wants long term profitability while the latter wants as much money as possible, now.

To even talk about “the market” in relation to this grotesque abomination is completely wrongheaded. The existence of the Volt has nothing to do with anything even remotely associated with a “market” economy. It is a Frankenstein creation of a state supported entity in order to satisfy a non-existent demand and is to be sold at a price that no one would ever pay in a “free” market. What dealers do or do not do will not make a bit of difference. Only fools would ever get involved with any of this in the first place. We are all tax paying fools.

If there is no “market” how come lesser hybrids sell like hotcakes?
Besides that little nugget… are you one of those people that think that this would be the first time that the government has stepped into the “marketplace” as has changed its fundamental course. Get Real…
There was never any “free” marketplace, not in reality. It was a figment of Adam Smith’s imagination… but nothing more.
I’m thankful that there is investment of this sort happening at all, the technolgical knowledge and advancement is important enough.
All in all though, the faux outrage surrounding this car.. the company… everything is nauseating and hypocritical in the very least. Why is it that everyone is so concerned NOW about govt spending… why didn’t people care 6 years ago.
But I digress… this is TTAC.

I am enjoying the dilemma of the naysayers about the Volt. You constantly rant about how useless the car is and nobody wants it, but the reality is setting in now that the car is close to release. The reality is that many people want the car. After the initial buyers are satisfied, many people will be at the door to buy one as long as there are huge subsidies to keep the price in the lower 20’s. Millions of Americans are concerned about the environment and want to make a choice that will help them carry their share of the stewardship burden. Volt will satisfy that need. Very few of these people read this auto extremist blog.

Many people who can “put their money where their mouth is” will look at the Gulf oil spill and say to themselves “If I buy this car, I’ll rarely have to go to the BP station down the road”. And there are probably more of those people than anyone thinks.

But then, there’s that “cognitive dissonance” that will force those same people to ignore mountaintop removal as they drive their 30-mile loop to work, the mall, Starbucks, etc.

There are many fixes in the works to make renewable energy a bigger part of the EV paradigm, but alas, customer demand will drive that revolution, and the customer must make economic and political choices that will accelerate this revolution, even at increased expense.

Anyone who “cares about future generations” will stop the charade of cheap energy – that bill will come due for an unprepared America at the expense of our descendants.

I’m tempted to liken the Chevy dealer who only gets one Volt to sell this year to Rod Blagojevich and the empty Senate seat…that “f***ing valuable thing” that can’t be given up without a lil’ somethin’-somethin’. Americans like to win and they like to be first; that’s why the Volt is being made in the first place. But that’s also the reason this first batch of Volts can be sold for as much money as the most enthusiastic/impatient customers are willing to pay – which could well be a lot more than $41,000.

The first people who shell out inordinate amounts of money for the Volt aren’t making the purchase to save money, fuel, or the planet. They’re buying it so they can be first. They’re paying more for the privilege of being first. Just as iPhoniacs line up and pay more – in both time and money – for the privilege of owning an iPhone before…most other people. The person who is very first in line will feel all the more privileged; far more than the guy in the part of the line that bends around the block.

It doesn’t have to be an iPhone…it could be the new Playstation or XBox or Harry Potter book. The first small batch of Volts isn’t for those who want to save money or the world. The first batch is for those who need the Volt now Now NOW. I don’t begrudge those people at all; in fact our economy needs people who will pay more now rather than wait and pay less later. Just like credit card companies need people who don’t pay their bills on time, and gas stations need people who can’t stop eating or smoking.

Though this may sound cynical, for those dealers who only get one or two or three Volts – well, those are just going to be one or two or three bonuses for the dealers. Not three opportunities to help people save money on gas…not three opportunities to decrease our dependence on foreign (mostly Canadian) oil. They’ll be handsome paydays. If some people have the cash to pay way too much for the first Volts, let ’em spend it. This is their time. And I guarantee the purchase will make them happy.

What’s galling in this instance is the $7,500 government subsidy. If you’re so damned hot on the car to pay above MSRP, I say they take the subsidy out buck-for-buck above MSRP and you can pay me, the U.S. taxpayer, back first.

Or Oil Companies, or the industrialized farming complex… or Churches? WHY WHY WHY???
As much as I hate dealerships and their scummy ways, this argument is just wrong and tired.
Contrary to popular belief… this isn’t the first time there have been subsidies.
Deal with it.

The whole reasons GM asked for subsidies is because they argued they needed them to sell the vehicle competitively. That subsidy is going to the consumer. If dealerships can price gauge the vehicle than obviously GM doesn’t need those subsidies to sell the vehicle and the subsidies are only going to the dealership. The argument is a very valid one that you obviously don’t understand or you own a dealership.

No I don’t own a dealership… But I do understand that I don’t think its GM’s wish that their dealers gouge customers. Regardless the vultures will look for their pray. It not my business to tell people how to spend their money.
This subsidy could easily bypass the dealers entirely, and be repayment to the customer directly.
Once the “money is no object” base is gone, their will need to be subsidies to get this to sell.

There is an element that people are missing here: how many people not in the market for a $40,000 techno marvel will go to a Chevrolet showroom to see it and perhaps be exposed to some of the brand’s more recent better efforts.

The Volt might even generate sales of those vehicles. If it drives showroom traffic then it’s value may be greater than anyone thinks.

Unless of course the mark-up doesn’t just piss people off to the point of never doing business with a Chevrolet dealer under any circumstances. Fool me once ….????

If I still purchased GM products,I’d buy the Cruze [or upcoming Aveo] and bank the difference.

Toyota did the same thing with the dealer markups when the ’04 Prius hit, but I sort of suspect GM dealers won’t be quite as successful. The Volt just doesn’t look “different” enough for what it is to justify those kinds of markups. Those first Prius’s were noticeable. A Volt would just blend in with the other GM small cars on the road. And I don’t think it has the “uber-geek cool” factor (Tesla) that would have the Google guys snapping it up.

Dealers will charge what the market will bear. If they can get $20K above MSRP, they will. The Volt may also sit in dealer lots until the price is $30K all in, and that’s also what may happen. I have no love for car dealerships, but if there are people who so desperately want the Volt that they will pay the added mark-up, well, so be it.

I am NOT a GM fanboi, but I have to say that I’m astounded at the level of hate for the Volt, and for GM, on this site. If everybody stopped buying from GM, American and Canadian taxpayers end up with nothing. I truly hope that GM can make a go of it and repay some if not all of the debt owed to the people. If the Volt helps with this, then all the better. I know the Volt doesn’t represent totally all new technology, but the fact that it may actually travel 40 miles without needing the ICE, and the fact that it can be plugged in or recharged as it’s driven is cool, I think. I can’t wait to see one up close. I am very intrigued by the concept.

More importantly, my wife is fascinated by the fact it may go 40 miles on electric power only. What follows is the conversation we had while driving home from Minneapolis on the long weekend. It began with her asking me what was the GM Volt, and if it was electric:

“Why does it have a motor! How is that possible with batteries?”

A freight train moves past, pulling over 100 cars behind it. I point it out to her and explain that the locomotive is similar in concept.

“So how does it run, then?” she’s unusually curious about the mechanics of a vehicle.

“It’s an electric car that uses a gasoline engine to recharge the batteries as it’s driven by electric motors.” I explain, with the freight train rumbling it’s one note song.

“So because my commute is only 45 kilometers in total, I won’t ever have to fill the tank?” she asks me.

“Not unless you go over 70 kms (40 miles) between plugging it in.” I tell her.

“So as long as I plug it in, I’ll never have to put gas in it?” she asks, fascinated.

“As long as you travel no more than 70 kilometers between charges, you’ll never need to put gas in it.” I answer.

“So it’s better than a Prius then?” (It’s the only hybrid she knows by name.)

I had to tell her the truth, that I don’t know the answer to that. What’s important, and that a lot of people commenting on the Volt fail to realize, is that my wife, (and a lot of other “pilots” as opposed to “drivers”) doesn’t see the purchase price as part of the “ecology” of ownership, but she does see the benefit of never having to put gas in a car. In Canada, electricity is a hell of a lot cheaper than gasoline: if she hardly ever has to fill the tank, especially at the much hated BP or Petrocanada, all the better.

The other selling point, which she recognized right away, is that if she exceeds the 40 miles of electric power, the engine will get take over, and she won’t have to worry.

As I have pointed out numerous times, my wife is the prototypical “pilot”. If the Volt eliminates one of her hated duties, which is filling the gastank every week, she’s going to be interested in it. She won’t ever pay $41K for it, but if she could buy it for under $30K, she will. I think the Volt has a market, and it is centered on the “gotta have it first” buyers, “greenies” and people like my wife, who, if the price is cheap enough, will pester me to buy one for her.

Man, some of you folks need to get over your hater attitude. GM is not the GM of 1970 (Vega) or 1980 (Citation) or 1990 (Cavalier), or even 2007 – it’s way better product in the last two years than GM has had in decades.

Again, I’m NOT a GM fanboi (Toyota and Ford for me), but some of you have to loosen your grip on the past and embrace the present/future.

The phrase ‘letting the market work’ when it comes to dealers is misleading. If there was a true market in Volts, I could go to Chevy Dot Com, transfer $41K (+ sales tax + registration + destination, etc) from my bank to Chevy. Then, in a few days, my Volt would be delivered to my house.

BUT THAT’S NOT LEGAL. Dealers (via their state legislators) have made it so.

Of course, if such an internet sales channel WERE possible, aggressive speculators would get Volts early. And flip them. But the greater number of possible transactions would flatten the market quicker.

Which is part of what’s wrong with the retail car biz. A store with a 30 foot ‘Chevrolet’ sign can treat customers (and the long term health of the brand) like dirt. OEM’s have little control.